The role of parental investments for cognitive and noncognitive skill formation—Evidence for the first 11 years of life

► Conditions in early life until the age of 8 years are critical for the development of cognitive and noncognitive skills. ► In utero conditions and birth risk play a crucial role for the development of cognitive and noncognitive skills during childhood. ► Cognitive and noncognitive skills during childhood can predict school outcomes in adolescence. This paper examines the impact of parental investments on the development of cognitive, mental and emotional skills during childhood using data from a longitudinal study, the Mannheim Study of Children at Risk, starting at birth. Our work offers three important innovations. First, we use reliable measures of the child's cognitive, mental and emotional skills as well as accurate measures of parental investments. The observed investments include parental health behaviour, playing and talking with the child, play materials, leisure activities and others. Second, we estimate latent factor models to account for unobserved characteristics of children. Third, we examine the skill development for girls and boys separately, as well as for children who were born with either organic or psychosocial risk. We find a decreasing impact of parental investments on cognitive and mental skills over time, while emotional skills seem to be unaffected by parental investments in childhood. Thus, inequality at birth persists during childhood. Since families are the main sources of education during the first years of life, our results have important implications for the quality of the parent–child relationship. Improving maternal health during pregnancy and parental investments in infancy can yield large benefits for cognitive and mental development later in childhood.